Over the past week or so, most Australians would have received an email notice from their bank announcing "bigger", "better", or at best "changes to" their rewards program.

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In fact, the banks are on a mission to claw back about $600 million of income about to be shorn from their profits because of a Reserve Bank decision to prohibit merchants from charging credit or debit cards fees on transactions from October 1.

The Reserve expects merchants to absorb the cost, just like electricity, rent, rates and water, and charge all customers the same price for the same item.

In return the fees merchants pay to credit-card-sponsoring banks will be capped.

So the banks will take a hit unless they can claw back the reduced income in other ways - basically by reducing the benefits that come with the rewards programs and trying to tart up any changes as improvements when in fact, overall, customers will lose.

One of the biggest loss centres for customers will be the change by the Commonwealth Bank, Australia's biggest bank with 17 million customers, to its Qantas arrangement.

Hitherto every dollar spent on a card automatically converted to Qantas points. Qantas has at least 5.7 million customers. Under the new "better" scheme you will get fewer Qantas points for every dollar spent and you will have to pay an annual fee of $149 to be in the program.

This is on top of Qantas itself reducing the value of points by increasing the number you need for a flight or an upgrade.

The changes give rise to a few policy questions.

The Reserve's card-fee change is a bit of a backpedal. Originally these fees were not allowed to be passed on to customers who use cards. It was similar to the decision that came with the imposition of the GST that consumers should be shown the price they will pay without any add-ons. That has a lot of merit.

But then, in 2003 the Reserve saw other, competing, policy considerations and allowed the credit-card charges........

© Canberra Times